Tontines and life annuities both insure against longevity risk by guaranteeing (pension) income for life. The optimal choice between these two mortality-contingent claims depends on personal preferences for consumption and risk. And, while pure tontines are unavailable in the twenty-first century, the first longevity-contingent claim (and debt) issued by the English government in the late seventeenth century offered a choice between the two. This article analyzes financial and economic aspects of King William's 1693 tontine that have not received attention in the literature. In particular, it compares the stochastic present value (SPV) of the tontine vs the life annuity and discusses characteristics of investors who selected one versus the other. Finally, the article examines the issue of whether high reported tontine survival rates should be attributed to anti-selection or fraud. In sum, this article is an empirical examination of annuitization decisions made by actual investors in the late seventeenth century.

In July 1983 an agreement was reached between the British government and the London Stock Exchange that was to transform the London securities market in October 1986. The result was a revolution that extended all the way from the design of the market to those permitted access to the governance of those who traded. Given the speed of change, it was termed ‘Big Bang’ by contemporaries. As the scale of the transformation became known, politicians were quick to claim credit for what had been achieved. Subsequently, Big Bang has been regarded as one of the crowning achievements of the Conservative government led by Mrs Thatcher, providing the foundation for the City of London's re-emergence as the leading international financial centre. However, only now is evidence emerging of the intentions of those involved at the time rather than as expressed in the light of hindsight, which casts doubt on what they were seeking to achieve, whether viewed from the perspective of either the politicians or those in charge of the Stock Exchange. Instead, the longer-term pressure for change in the London securities market, the chain reaction caused by abolition of fixed-commission charges, and the proactive role of the Bank of England appear to be of greater significance. What an examination of the process leading up to Big Bang in 1986 reveals is the complexity of political decision involving the financial sector and the danger of unforeseen consequences. One small change can create a tipping point if the result is to remove an essential element within a complex system.

We examine the relationship between prices and interest rates for seven advanced economies in the period up to 1913, emphasising the UK. There is a significant long-run positive relationship between prices and interest rates for the core commodity standard countries. Keynes ([1930] 1971) labelled this positive relationship the ‘Gibson Paradox’. A number of theories have been put forward as possible explanations of the paradox but they do not fit the long-run pattern of the relationship. We find that a formal model in the spirit of Wicksell (1907) and Keynes ([1930] 1971) offers an explanation for the paradox: where the need to stabilise the banking sector's reserve ratio, in the presence of an uncertain ‘natural’ rate, can lead to persistent deviations of the market rate of interest from its ‘natural’ level and consequently long-run swings in the price level.

By examining the acts of the Public Notary of Haifa (1890–1915), this article shows that it was the traditional informal market of credit, run by local notables, which financially supported the development of the small-landholding-based agricultural sector of the Haifa district in late Ottoman Palestine. In seeking to ascertain what led to the success of the informal rural credit market as compared with the formal credit market, the article finds that the local notables, who acted as financial intermediaries for small landholders, enjoyed an information advantage over the banks stemming from the establishment of interlinked credit market transactions connected to the stipulation of bay' wafā, salam and muzara‘ah contracts. In a context of land privatisation and growing commercialisation of agriculture, these contracts became the instruments used by notables to invest in peasants' landholdings and to manage a sales network for agricultural products on a local and international scale, hence representing an efficient financial institution to support the ‘agricultural export-led growth’ of late Ottoman Palestine.

This article surveys the monetary history of Koryŏ from the eleventh to the thirteenth century. During the first century of the dynasty, Koryŏ was at war with the Liao, prohibited trade with the enemy and pursued a policy of protecting its metal reserves. During the ban on metallic coins, rice and cloth served as commodity monies, ensuring price stability in a phase of sustained growth of the rural economy. A second phase began after the victory over the Liao in 1018. Backed by military strength, the government issued iron, bronze and silver currencies to facilitate international trade. The Koryŏ ‘silver vase’ currency, which circulated for three centuries, partly bridges the ‘black hole’ in East Asian monetary history from the Late Tang to the Ming period. The intrinsic value of the metallic currencies in conjunction with state issuance provided monetary stability. In turn monetary instability characterised the late Koryŏ, when the country came under the influence of the Mongol Yuan. The destabilising effect brought about by the introduction of Yuan paper money demonetarised the economy. By framing monetary history within a wider perspective of struggles for sovereignty and political hegemony, the article allows a better understanding of domestic and regional dynamics in East Asia.

The collapse of the ambitious and experimental Ayr Bank (Douglas, Heron & Co.) was the central episode of the 1772–3 British credit crisis and served as a direct influence on Adam Smith's monetary analysis in the Wealth of Nations. This article identifies the issuance of redeemable annuities in response to the bank's stop of payments in June 1772 and the distressed nature of its asset liquidations afterwards as the main reasons behind the size of its losses. It furthermore uses primary manuscript evidence to reconstruct and extend the existing narrative of this famous episode, from the planning stages in 1773 while the bank was still fighting for its survival, to the retirement of its banknotes by the Edinburgh public banks in 1773–4, the legal and political manoeuvring behind the redemption of the annuities by Act of Parliament in 1774, and the over 40 years of asset unwinding that followed.

On the basis of a novel dataset, the article investigates the anatomy of financial crises in Norway from 1830 to 2010. First, nine significant crises are identified. Second, the article examines spillover effects on the real economy. We find a clear but not symmetric relationship. Third, the article investigates key patterns in credit and money volumes. Major financial crises typically occurred after substantial money and credit expansion, causing financial instability.

This article analyses the success of the Bordeaux Mont-de-Piété between 1801 and 1913. This success was related to several factors. While the legislative environment was already advantageous (monopoly status for pawnbroking), the establishment prospered courtesy of the social and economic environment. There was indeed high social demand for financial aid linked to the individual needs of a population that found itself in a situation of virtual exclusion. The establishment also benefited from high repayment rates, which limited additional costs, regularly found ways to refinance its operations and took advantage of there being no people's banking system.

Indebted cities were a widespread phenomenon during the Ancien Régime. However, some found ways to innovate the management of their municipal debt, whilst others fell prey to over-indebtedness or default. In this article we have left the success stories aside and focused on the latter. Using early modern Antwerp as a case study, we have disentangled the underlying mechanisms that ultimately lead to over-indebtedness and (in some cases) default. Whilst the economic climate and the relationship between city and state have been rightly identified as major factors in the previous literature, our contribution brings another element to the table, namely, the inflexibility of long-established rent arrangements and the entanglement between the ruling elite and the rentiers. We show that there was a strong overlap between both groups, which had a huge impact on the financial policy of cities during the early modern period.

How could a primitive credit market finance the early industrialisation of an underdeveloped economy? To answer this question, we use a hand-collected data set of mortgage loans raised by industrial firms in the city of São Paulo during the period 1866-1914. These mortgages were debt obligations collateralised by land, improvements, machinery and equipment. We argue that the mortgage credit market was a key source of funding for early industrial investments in Brazil. We find that industries were mainly funded by non-banking and domestic agents. The empirical evidence suggests that mortgages were an important proxy for industrial investment.

The granting of a £7,000m bilateral loan by the British government to the Republic of Ireland in October 2010 highlights the banking co-dependence of modern Anglo-Irish relations. This article provides a Bank-of-England-centred perspective on the development of Irish monetary institutions from the granting of Irish monetary independence in December 1921 to the establishment of the Central Bank of Ireland in 1943. Irrespective of unresolved Anglo-Irish political issues, the Bank of England's Irish policy during this period was based on a strict adherence to Montagu Norman's key central banking principles of co-operation, exclusiveness and political autonomy. This article identifies that the application of these principles survived both the coming to power of Fianna Fáil (Soldiers of Destiny) in Southern Ireland in 1932 and the outbreak of war in 1939. This article also argues that Norman's adherence to a wider internationalist view of monetary relations played an important role in forcing the overwhelmingly Protestant and pro-union Irish commercial banks, headed by the Bank of Ireland, to come to terms with the reality of Irish monetary independence. In this context, Norman's approach to Southern Ireland parallels the transition from Empire to Commonwealth, which began to emerge in the interwar period.

This article examines the impact of organizational structure on risk taking across different lines of property insurance (fire, marine, vehicle and specialized property insurance) in Sweden from 1913 to 1939. Based on the theoretical arguments whereby the mutual organizational form has a competitive advantage in underwriting homogeneous but unknown risk distribution, while the stock organizational form is more likely to underwrite more volatile and heterogeneous risk categories, we conclude that organizational form has a significant impact on risk taking. Our empirical analysis shows that the risk taking, measured as incurred claims to anticipated losses, was on average lower among mutual insurers. When comparing across lines of insurance, the analysis shows that the mutual form was more successful in keeping down risks in fire and marine, while less so in vehicle and specialized property insurance. Stock companies mitigated the higher risk by ceding more premiums to reinsurers and by diversifying more across different lines of insurance.